Representing you in life & business

Blandy & Blandy Solicitors

Insights // 01 April 2024

Living Together – What Should I Know About Property Ownership?

Claire Dyer and Peter Hilton, in our Family Law team, explain the facts that couples living together should be aware of.

Contrary to what many people believe, there is no such thing as a ‘common law marriage.’ Cohabiting couples do not have the same rights as married couples or civil partners.

When cohabiting couples separate, they must rely on a combination of legal rules spanning the law of property, trusts and contract. These remedies are limited and only partially address the issues separating cohabitees face, as they are not designed to assist couples to unravel their financial links.

The House of Commons Women and Equalities Committee published a report in August 2022 following their enquiry into the rights of cohabiting partners and the concept of “common law marriage”. The government’s response was published later that year, largely rejecting the report’s findings in favour of additional education on the distinction between marriage and cohabitation rights.

Cohabiting families are the fastest growing family type in England and Wales and, consequently, there is a pressing need for greater legal protection. The lack of protection afforded to cohabitating couples on separation, in comparison to married couples/civil partners, was addressed by the Law Commission Report in 2007, but their recommendations seem now to have been rejected. No new legislation has been timetabled to address either the Women and Equalities Committee Report nor the Law Commission Reports recommendations on strengthening rights on separation, death or intestacy for cohabiting couples.

Despite the government rejection of the proposed revisions to legislation, the Women and Equalities Committee is continuing to pursue matters, having written a joint letter to the Family Justice Minister in June 2023. The Committee Chair, Rt Hon Caroline Nokes MP, has stated that the government’s stance:

“means basic legal protections for cohabiting partners and their children could be many years away.”

Accordingly, if you are unmarried but in a relationship and are considering purchasing a property with your partner, it is important to understand how your property will be treated on separation and how to protect yourself.

The current law on co-owning property

There are two types of property ownership, legal ownership and beneficial ownership. Legal ownership usually refers usually to the person(s) whose name is registered as the owner at the Land Registry. Beneficial ownership does not have to mirror the legal ownership, and it is quite possible to establish beneficial ownership without holding legal ownership.

Beneficial ownership deals with issues such as rights of occupation and the entitlement to benefit from sale proceeds. When two or more people purchase a property, they must declare how they wish to hold their beneficial interests in the property, either as joint tenants or tenants in common.

Under a joint tenancy, all the beneficial owners (the joint tenants) are equally entitled to the property. They effectively own the whole property as one entity. If the property is beneficially owned as joint tenants, and one owner were to die, the property would immediately transfer to the surviving joint owner(s), regardless of any provisions within the deceased’s Will.

It is possible to sever a joint tenancy, in which case there will be a tenancy in common. You can also elect to hold the property as tenants in common when first purchasing the property. A tenancy in common denotes each owner having a quantified beneficial share of the property. Those shares do not have to be equal. It is common for tenants in common to record these distinct shares within an agreement known as a ‘Declaration of Trust.’

How does this affect me if I am separating from my partner?

When separating cohabitees own a property as joint tenants, unless otherwise agreed, the legal starting point is that each person is equally entitled to any equity in the property.

When separating couples own a property as tenants in common, unless otherwise agreed, the legal starting point is that each person is entitled to their specified share of the property declared at the time of purchase or recorded in the Declaration of Trust. It is also possible to argue that the specified shares of the property declared at the time of purchase did not accurately reflect the couple’s intentions, or that they have changed during the course of the relationship.

An example

Sarah and Michael purchase a property for £400,000. The required deposit is £40,000. Sarah has saved significantly more than Michael. Sarah pays £30,000 towards the deposit and 75% of the mortgage. Michael pays the remaining £10,000 deposit and 25% mortgage. Sarah and Michael agree between themselves that when the property is sold the net equity (i.e. after the mortgage and costs of sale are paid) should be split 75% to Sarah 25% to Michael.

 If Sarah and Michael purchase the property as joint tenants, despite the original agreement between them, Michael would be entitled to 50% of the net equity in the property from a legal perspective.

 If Sarah and Michael purchase the property as tenants in common, Sarah can protect her investment in a number of ways;

  1. Declaration of Trust – this is a written agreement which will detail how the equity in the property shall be distributed if sold and in this example, could record the agreement Sarah and Michael have made between them.
  2. Specifying the percentage share each person holds in the Transfer Deed – this does not require a separate written agreement and the specified percentages can be updated at a later date. This option is less flexible than a declaration of trust.

Even if Sarah and Michael purchase the property as tenants in common in equal shares, it may be possible for Sarah to argue that they had a prior agreement, subject to producing sufficient evidence of the agreement.

In general terms, having documentary evidence of an express agreement as to how the proceeds of a property should be split is always preferable and avoids the risk of argument at a later date.

If you have any queries about the form of ownership of your property, and are living together with a partner, please don’t hesitate to get in touch.

For further information or advice, please visit www.blandy.co.uk.

This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.

Claire Dyer

Claire Dyer

Partner, Family Law

Read Bio

Peter Hilton

Peter Hilton

Associate Solicitor, Family Law

Read Bio